F I L E D

UNITED STATES COURT OF APPEALS

United States Court of Appeals

Tenth Circuit

FOR THE TENTH CIRCUIT

AUG 8 2003

PATRICK FISHER
Clerk

OLD WEST ANNUITY AND

LIFE INSURANCE COMPANY,
Plaintiff-Appellee,
v.
PROGRESSIVE CLOSING &
ESCROWS, INC.; EDWARD JONES,
doing business as Progressive Closing
& Escrows, Inc.,

No. 02-7082
(D.C. No. 01-CV-593-S)
(E.D. Okla.)

Defendants-Appellants.
ORDER AND JUDGMENT

Before TACHA , Chief Judge, BRORBY , Senior Circuit Judge, and

Circuit Judge.

HARTZ ,

After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties request for a decision on the briefs without oral

This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.

argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument.
In this diversity breach of contract action governed by Oklahoma law,
Progressive Closing & Escrow, Inc. and Edward Jones dba Progressive Closing
& Escrow, Inc. (Progressive) appeal the district courts grant of summary
judgment in favor of Old West Annuity and Life Insurance Company (Old West).
We affirm.
The material facts of this case are not in dispute. The parties agree that
Old West contracted with Progressive to close a $357,500 loan to certain
borrowers on a forty-acre parcel of undeveloped commercial property and to place
Old West in a first lien position on the property. Progressive closed the loan on
October 29, 1999, but Old West was placed in a third lien position, behind two
other mortgage loans that had been recorded on August 11, 1999. Old West
eventually foreclosed on the property, but received none of the foreclosure
proceeds because of its third lien position. It then brought a breach of contract
claim against Progressive.
Progressive argued the contract was ambiguous and invoked a supervening
impractibility defense. The district court rejected these arguments and granted
summary judgment in Old Wests favor. Further, the district court ruled that the
proper measure of damages was the amount of money that is needed to put [Old
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West] in as good a position as it would have been if the contract had not been
breached. Appellants App. at 75 (quoting Okla. Unif. Jury Instructions (OUJI)
Civil 2d No. 23.51); see also Okla. Stat. tit. 23, 21. Specifically, the district
court ruled that damages would be the loan amount minus any payments received
by Old West toward reduction of the loan. The parties then stipulated that, under
the measure of damages determined by the district court, Old Wests damages
totaled $357,464.65.
We review the district courts grant of summary judgment de novo,
applying the same legal standard used by the district court.
ex rel. Dept of Mental Health & Substance Abuse Servs.

Simms v. Okla.
, 165 F.3d 1321, 1326

(10th Cir. 1999). Summary judgment is appropriate if . . . there is no genuine

issue as to any material fact and . . . the moving party is entitled to a judgment
as a matter of law.

Id. (quoting Fed. R. Civ. P. 56(c)). The interpretation of

an insurance contract is governed by state law and, sitting in diversity, we look

to the law of the forum state, here, Oklahoma.

Houston Gen. Ins. Co. v.

Am. Fence Co. , 115 F.3d 805, 806 (10th Cir. 1997).
Plaintiff first contends the contract is ambiguous because it did not
obligate Progressive to warrant, guarantee or insure that Old West would be
placed in a first lien position. In relevant part, the contract instructs Progressive:

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Do not close or fund this loan unless ALL conditions in these closing
instructions . . . have been satisfied.
***
You are authorized to disburse funds on the Borrowers behalf and to
record all instruments when you comply with the following:
*This loan must record in a 1st lien position prior to the Loan
Commitment expiration date.
Appellants App. at 54.
Progressive argues that these terms are somehow inherently contradictory
and, because there are no qualifiers or conditions, that reasonable jurors could
differ on the scope of the agreement. Under Oklahoma law, [a] contract term
is ambiguous only if it can be interpreted as having two different meanings.
S. Corr. Sys., Inc. v. Union City Pub. Schs.

, 64 P.3d 1083, 1088, n.12

(Okla. 2002). The Court will not create an ambiguity by using a forced or
strained construction, by taking a provision out of context, or by narrowly
focusing on the provision.

Id. at 1089. We agree with the district court that

the contract is not ambiguous. Indeed, Progressive has admitted it assumed

a contractual duty to file a mortgage on Old Wests loan such that Old West
would have a first lien position. Appellants App. at 23, 45; Appellants Br.
at 12.
Next, Progressive contends the district court erred in rejecting its
supervening impractibility defense. Progressive claimed that it had contacted
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a third-party abstractor to perform a title search, or gap search, from the time
the abstract of the property had last been brought current to the date of the loan
closing and had received a verbal report from the abstract company that the title
was clean.

Citing Restatement Second of Contracts 261,

Progressive contends

it was relieved of its duty to perform under the contract because a supervening
event made performance impracticable, namely, a competing lien was filed before
Old Wests was recorded. Appellants Br. at 10. Progressive further argues this
supervening event occurred through no fault of its own because the third party
abstractor informed it that title was clean. These arguments are without merit.
A 261 impracticability defense requires a party to show that
non-occurrence of the event was a basic assumption upon which the contract
was based. See Seaboard Lumber Co. v. United States

, 308 F.3d 1283, 1294-95

(Fed. Cir. 2002) (citing

, 518 U.S. 839, 904 (1996),

United States v. Winstar Corp.

and 261). To the contrary in this case, the risk of a competing lien was
precisely the type of foreseeable event contemplated by the parties, and precisely
The abstract company claimed it does not issue verbal gap search reports
and the closing statements do not indicate any payment for a gap search. As
noted below, this dispute is not material to Old Wests breach of contract claim
against Progressive.

This provision states, Where, after a contract is made, a partys

performance is made impracticable without his fault by the occurrence of an event
the non-occurrence of which was a basic assumption on which the contract was
made, his duty to render that performance is discharged, unless the language or
circumstances indicate the contrary.

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why Old West instructed Progressive not to close or fund the loan unless Old
Wests loan would be recorded in a first lien position. Indeed, the existence of
competing liens was not even a supervening event, as they had already been
recorded at the time of the contract and the closing.
Progressives argument that it is not at fault because it received a verbal
report of a clean gap search from a third party abstractor is also unavailing.
Ordinary principles of contract law recognize that an obligor cannot free itself of
contractually created duties by delegating them to another, without the consent of
the persons to whom it is obligated.
24 F.3d 1272, 1278 (10th Cir. 1994);

See Headrick v. Rockwell Intl Corp.

Minnetonka Oil Co. v. Haviland

, 155 P. 217,

219 (Okla. 1916); Restatement (Second) of Contracts 318(3). Old West did not
consent to any delegation of Progressives obligations under the contract to the
third-party abstractor. Progressives argument that it did not assume a duty to
perform a gap search is disingenuous. It agreed under the contract to provide
a title insurance commitment, and acknowledged it was required by the title
commitment to perform a gap search.

See Appellants App. at 30, 31. More to

the point, it assumed a duty not to close or fund the loan unless the first lien
position condition was met, and it failed in that duty. In short, the district court
correctly ruled that Progressive breached its contract as a matter of law.

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Finally, Progressive contends the district court erred in determining

damages. It agrees that the proper measure of damages is the amount of money
needed to put Old West in as good a position as it would have been absent
a breach. See Okla. Stat. tit. 23, 21, OUJI 23.51. It contends, however, that the
district court invaded the province of the jury when it ruled the amount of the
loan, less any payments made by the borrower, constituted those damages.
It argues a jury could have concluded that, had Old West received a first lien
position in the absence of a breach, it could have successfully foreclosed on the
property and, therefore, the measure of damages should be one of two appraisal
values given for the property at the time of the foreclosure. We disagree.
Progressive breached the contract by funding the loan when it had not met
the pre-conditions for doing so. Returning those funds to Old West most directly
compensates it for the damages proximately caused by the loss of those funds.
Moreover, under Oklahoma law, the amount awarded for breach of contract must
be ascertainable in some manner other than by mere speculation, conjecture or
surmise, and by reference to some definite standard.

John A. Henry & Co., Ltd.

v. T.G. & Y. Stores Co. , 941 F.2d 1068, 1071 (10th Cir. 1991) (quoting

Great

W. Motor Lines, Inc. v. Cozard , 417 P.2d 575, 578 (Okla. 1966)). Progressives
proposal to use a speculative appraisal amount based on a foreclosure sale in
which Old West is, hypothetically, the first lien holder, does not satisfy this
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criteria. We find no error in the district courts determination of the proper

measure of damages.
The judgment of the district court is AFFIRMED.
Entered for the Court

Wade Brorby
Senior Circuit Judge

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